Released at the end of last month, the 234 page Senate Economics References Committee Report on foreign bribery seeks to address what it considers to be Australia's historically poor record in investigating and prosecuting foreign bribery matters. Having received and considered 46 submissions and having held three public hearings, the Committee made 22 recommendations, covering foreign bribery investigation, enforcement, strengthening Australia's legal framework against foreign bribery and building a culture of integrity and compliance.
Currently, the Commonwealth Criminal Code Act (1995) (Cth) prescribes hefty penalties for companies whose employees, officers or agents bribe foreign public officials in order to retain business (or a business advantage) that is not legitimately due. Bribes may include payments disguised as political or charitable donations, as well as lavish expenses paid such as travel, education and gifts. It does not matter if that bribe occurs overseas: the laws have extraterritorial effect. Further, the statute of limitations does not apply. On top of that, while D&O insurance may cover legal fees relating to investigating and defending allegations, it will not cover penalties imposed for an offence.
Importantly, the Code provides that a company will be deemed to have intended to bribe a foreign official if it "fails to create and maintain a corporate culture requiring compliance with anti-bribery regulations". On this issue, the Senate Committee received submissions as to the difficulties facing companies seeking to identify their legal obligations and appropriately document their compliance. This is particularly important given the wide reach of the laws.
The Committee referred to a December 2017 OECD Working Group on Bribery report which stated that guidance is needed on:
- the nature and degree of co-operation expected of a company;
- when and how a company is expected to reform its compliance system and culture:
- the credit given to a company's cooperation with the regulators; and
- measures to monitor the company's compliance with any resulting plea agreement.
In response to these submissions, the Committee recommended that the Government provide practical guidance to companies relating to foreign bribery and increase awareness of high-risk sectors and regions in which Australian businesses commonly operate.
It remains to be seen how much practical and comprehensive guidance the Government will give to companies seeking to meet their compliance obligations. This will be particularly important in light of other recommendations which will significantly beef up the foreign bribery regulatory landscape.
A new corporate offence for failing to prevent foreign bribery
This recommendation is picked up in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017, currently before the Senate.
Criminal liability would be imposed on companies whose "associates" (which is intended to be even broader than employee, agent, contractor, subsidiary or controlled entity) intentionally bribe a foreign public official for the profit or gain of the company. Corporate criminal liability will be automatic, regardless of whether the persons involved are convicted. If the prosecution establishes the offence, the Bill contemplates the onus shifting to the company to prove that it had a culture of compliance. This differs to the offence of bribing a foreign official, in which the onus is on the prosecution to prove that the company had failed to maintain a corporate culture of compliance.
Greater protection for whistleblowers
The Committee has recommended that the Government requests the expert advisory panel on whistleblowers to consider whether the scope of Australia's whisteblower protections provides sufficient coverage for foreign bribery cases.
The report noted that In October 2017, the Government released an exposure draft of the Treasury Laws Amendment (Whistleblowers) Bill 2017 for consultation, which will require public companies, large proprietary companies, and companies that are trustees of superannuation entities to have a whistleblower policy, and to make that policy available to officers and employees of the company.
Repealing the facilitation payment defence
Currently under the Code, a facilitation payment (a minor payment made to a foreign official for the purpose of speeding up minor routine government action) is a complete defence to the core foreign bribery offence. However, the Committee considered that a "facilitation payment" is no different from a small bribe and therefore should not be recognised as a defence to a foreign bribery offence. In its view, the removal of the defence would make it clear that all forms of bribery and corruption are unacceptable. This defence has already been abolished in the UK and Canada, and its scope has been narrowed in the US, Japan and South Korea.
Benefits for aiding prosecutors
As an incentive for companies to create a culture of compliance, the report recommends a deferred prosecution agreement scheme for companies to assist prosecutors with information and evidence gathering, in exchange for the deferral of a prosecution. This too is included in the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017.
What happens next for anti-bribery regulation?
It remains to be seen whether and, if so, how the recommendations will be implemented, and whether the Bills pass through Parliament. In any event, it is critical that companies invest time and seek specialist advice so that they can comply with this already expansive and onerous regulatory framework.